LONG TERM CARE PRODUCTS IN 2015
There was a considerable expansion of long term care products in 2014, and I expect this trend to only increase in 2015. Although traditional long term care insurance is normally the best long term care plan, it is far from the only one available. There are now eight types of long term care plans in the marketplace, each with its advantages and disadvantages:
- Traditional long term care insurance
- Linked life-long term care insurance
- Linked annuity-long term care insurance.
- Hybrid life insurance policies with accelerated death benefits for long term care
- Hybrid annuity policies with liberal surrender options for long term care
- Hybrid life insurance and annuity policies with accelerated death benefits for chronic illness, terminal illness and/or critical illness
- Term life insurance policies with accelerated death benefits for chronic illness, terminal illness and/or critical illness
- Critical illness policies
Long term care insurance specialists can expect a great deal of competition from life insurance agents who will link long term care protection to a life insurance or annuity proposal. It’s important to know that a “two for the price of one” solution has its compromises and often will not accomplish both of its intended purposes.
But there will also be an increase and a broadening in the structures of traditional long term care insurance products. The carriers are trying to conceal their latest ideas, but new and innovative plans have been filed. Look for these new plans to contain elements that are common to current life insurance products, such as:
- Flexibility…more options for the policyholder during the life of the policy
- More underwriting flexibility, with an increased number of rate tables
- Simplified issue for policies with very limited benefits
- Maybe even modified guaranteed issue products with reliance on the MIB and phone interviews for underwriting
- Catastrophic designed policies with long elimination periods
- Policies with less guaranteed values but allowing for flexible premiums
- Policies with short term benefits, especially with home care protection
- Policies with more living benefits
An ultimate goal is a new type of partnership between the insurance carriers and the government. The best minds in our industry are working on this goal. This will necessitate new and ground-breaking legislation in order to create a new legal framework for such a partnership. Unfortunately, this won’t happen in 2015.
With this broadening of structures, spreadsheet comparisons of products will become less and less meaningful. Agents and brokers will have to decide on factors besides price because they won’t be able to accurately compare prices. They will have to consider such factors as:
- Will the carrier be financially stable for the next thirty or forty years?
- Does the carrier have a strong presence in long term care planning?
- Does the carrier know how to adjudicate claims, and is it fair in doing so?
- Does the carrier underwrite fairly, and does it have a good appeal procedure?
- Are there some attractive living benefits in a particular policy?
- What are the special features that make a particularly policy desirable?
- Does the carrier have up-to-date technology and an e-application process?
- Can the agent or broker work effectively with the carrier’s administrative process?
The answers to these and other questions will guide the agent or broker into a more complex but better decision as to who has the best products and what will be the best solution for the consumer. 2015 will be an interesting time for long term care and will stimulate the thinking of agents and brokers. Enjoy the challenge!